IntroductionClass 11 Statistics For Economics NCERT Solutions
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Q1EXERCISES
Mark the following statements as true or false.
(i)
Statistics can only deal with quantitative data.
(ii)
Statistics solves economic problems.
(iii)
Statistics is of no use to Economics without data.
Solution
(i)
False. The chapter states that in addition to quantitative data, Economics also uses qualitative data. Qualitative data describes attributes of a person or group, such as gender or skill level (unskilled, skilled, highly skilled), which cannot always be measured in numbers but are important for economic analysis.
(ii)
False. Statistics does not solve economic problems on its own. It is an indispensable tool that helps economists to understand an economic problem by collecting and analysing data, identifying its causes, and formulating policies to tackle it. The actual solution involves implementing these policies, and the effectiveness of those policies is then evaluated using statistics.
(iii)
True. The chapter explains that to understand and analyse economic problems like poverty or to formulate policies, one needs economic facts, which are known as data. Without data on factors underlying an economic problem, no analysis is possible, and consequently, no policies can be formulated. Therefore, statistics, which is the study and analysis of such data, is essential for Economics.
Q2EXERCISES
Make a list of activities in a bus stand or a market place. How many of them are economic activities?
Solution
Activities at a market place include:
- A shopkeeper selling groceries.
- A customer buying vegetables.
- A porter carrying goods for a wage.
- A security guard on duty.
- People bargaining over prices.
- A vendor selling street food.
- A person just window-shopping.
- Children playing.
Economic activities are those undertaken for a monetary gain. Based on this definition, the following are economic activities:
- The shopkeeper selling groceries: This is a production/selling activity to earn a profit.
- The porter carrying goods: This is a service provided in exchange for a wage.
- The security guard on duty: He is an employee working for a salary.
- The vendor selling street food: This is a selling activity to earn income.
Activities like a customer buying vegetables (consumption), people bargaining, window-shopping, or children playing are part of the 'ordinary business of life' but are not considered economic activities for the person undertaking them, as they are not done to earn a monetary gain. The act of buying is consumption, which is a subject of economics, but the activity itself is not for earning money.
Q3EXERCISES
'The Government and policy makers use statistical data to formulate suitable policies of economic development'. Illustrate with two examples.
Solution
The statement is correct. Government and policymakers rely heavily on statistical data to understand the scale of economic problems and formulate effective policies. Two examples based on the chapter are:
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Poverty Alleviation Policies: To address the problem of poverty, the government first needs to know the extent and nature of the problem. This requires statistical data on how many people are poor, where they live, what their income and consumption levels are, their education levels, and their access to opportunities. By collecting and analysing this data, policymakers can identify the root causes of poverty (e.g., unemployment, lack of skills) and design targeted policies such as employment generation schemes, food security programs, or skill development initiatives. Statistics are then used again to evaluate the impact of these policies.
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Economic Planning and Resource Allocation: Economic planners need to make decisions about the future. For instance, in planning for the country's energy needs, policymakers must decide how much oil to import in the future. This decision cannot be based on guesswork. It requires statistical data on past consumption trends, expected domestic production, and future demand projections. By using statistical tools to predict these figures, the government can formulate a suitable import policy that ensures energy security without placing an excessive burden on the economy. This helps in making informed decisions for long-term economic development.
Q4EXERCISES
"You have unlimited wants and limited resources to satisfy them." Explain this statement by giving two examples.
Solution
This statement is the basic teaching of Economics, highlighting the fundamental problem of scarcity. It means that human desires for goods and services are endless, but the resources (like money, time, and raw materials) available to fulfill these desires are finite.
Example 1: A Student's Pocket Money
A student receives a limited amount of pocket money, say ₹500 per month. This amount is their limited resource. Their wants, however, might be unlimited. They may want to buy a new novel (₹250), watch the latest movie (₹300), eat out with friends (₹200), and buy a new video game (₹400). Since the total cost of their wants (₹1150) exceeds their resource (₹500), they cannot satisfy all of them. They must make a choice and prioritize, perhaps by buying the book and eating out, but forgoing the movie and the video game. This illustrates the conflict between unlimited wants and limited resources.
Example 2: A Farmer's Land
A farmer owns a small plot of land, which is a limited resource. With this land, they could grow various crops. They might want to grow wheat for their family's consumption, cotton to sell for cash, and vegetables for the local market. All these are their wants. However, since the land is limited, they cannot grow all these crops in the desired quantities at the same time. The resource (land) has alternative uses, but it is scarce. The farmer must choose what to produce and in what quantity, forgoing some options to pursue others. This choice arises directly from having unlimited wants and limited resources.
Q5EXERCISES
How will you choose the wants to be satisfied?
Solution
When faced with limited resources and unlimited wants, the choice of which wants to satisfy is based on priority and intensity. I will have to rank my wants in order of their importance or urgency.
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Identify and Prioritize: First, I would list all my wants. Then, I would arrange them in order of preference, from the most important or urgent to the least important.
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Evaluate Resources: Next, I would assess the resources I have available to satisfy these wants (e.g., the amount of money or time I have).
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Make a Choice: I would then allocate my limited resources to satisfy the highest-priority wants first. I will continue to satisfy wants down my priority list until my resources are exhausted. The wants that are lower on the list will remain unfulfilled.
For example, if I have ₹100, and my wants are to buy a pen for an exam tomorrow (₹20), have a snack (₹30), and buy a comic book (₹70), I would prioritize the pen first as it is most urgent. After that, I would choose the snack as it satisfies a basic need like hunger. Since I would have spent ₹50, I would only have ₹50 left, which is not enough for the comic book. Therefore, the want for the comic book would remain unsatisfied.
Q6EXERCISES
What are your reasons for studying Economics?
Solution
Based on the introductory chapter, there are several key reasons for studying Economics:
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To Understand Ordinary Life: Economics is the “study of man in the ordinary business of life.” It helps us understand everyday economic activities like consumption (how and why we buy things), production (how goods and services are made), and distribution (how income is divided in society). This knowledge helps us understand the roles we play as consumers, producers, employees, or employers.
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To Understand the Problem of Scarcity and Choice: The core of economics is understanding that our wants are unlimited but resources are scarce. Studying economics teaches us how individuals, businesses, and societies make choices to allocate their limited resources to satisfy their most important wants.
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To Analyse Major Economic Problems: Economics provides the tools to understand and analyse serious problems facing a country, such as poverty, unemployment, rising prices, and inequality. It helps us ask important questions like why some people are rich while others are poor and what can be done about it.
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To Formulate and Evaluate Policies: The study of economics, especially with the help of statistics, enables us to collect and interpret data related to these problems. This factual knowledge is essential for formulating effective government policies and for evaluating whether existing policies are working.
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To Make Better Personal Decisions: By understanding economic principles, one can make more informed decisions in their own life, such as managing personal finances, making career choices based on job opportunities, and planning for the future.
Q7EXERCISES
Statistical methods are no substitute for common sense. Comment with examples from your daily life.
Solution
The statement “Statistical methods are no substitute for common sense” means that while statistics provide valuable data and analysis, the interpretation and application of these results require practical judgment and a real-world understanding. Relying solely on statistical figures without considering the context can lead to flawed conclusions and poor decisions. The chapter illustrates this with the story of a family drowning while crossing a river because the father relied only on the average depth, ignoring the variations.
Here are two examples from daily life:
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Average Exam Score: Suppose a teacher announces that the average score of the class in a mathematics test is 60 out of 100. Statistically, this might seem like a decent performance. However, this average figure could be misleading. It could be that half the class scored 100 and the other half scored 20. Common sense is needed to understand that simply looking at the average hides the reality that a large portion of the class is struggling and needs immediate help. A policymaker or educator relying only on the average might wrongly conclude that no special intervention is needed.
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Product Reviews: When buying a product online, one might see that it has an average rating of 4.5 stars from 1,000 reviews. Statistically, this is a very high rating and suggests the product is excellent. However, common sense dictates that we should investigate further. It is possible that many of the positive reviews are fake or paid for. It is also possible that the few negative reviews highlight a critical flaw that would be a deal-breaker for a specific user (e.g., a phone has great features but a very poor battery life). Relying only on the average rating without applying common sense and critical thinking by reading individual reviews could lead to a poor purchase decision.